The world of startups in the United States is in a frenzy related to the lawsuit filed by the JP Morgan Chase bank against the founder of Frank, a startup that helps students get loans. This kind of thing has happened before.
Frank was founded by a young business woman named Charlie Javice. He made it when he was in his mid-20s, in 2017. Attracted by his prospects, JP Morgan bought him for USD 175 million in 2021.
Later, as quoted by us from The Street, JP Morgan was surprised because around 4 million users on Frank's platform were strongly suspected to be fake. They checked it by sending an email, but 75% bounced. For that, they sued Janice and other Frank executives to the law.
Janice's own lawyer pointed out that JP Morgan had distorted the facts. So indeed Janice cannot be said to be guilty until there is a court decision, even though JP Morgan's evidence is strong.
Well, there has been a similar case before. The perpetrator is Elizabeth Holmes, who was recently jailed. Similar to Janice, Holmes was still young when he founded a startup called Theranos.
Similarly to Frank, Theranos attracted the attention of investors because it was judged to present an important breakthrough. Theranos' business model is to conduct blood tests with its own technology that requires only a small sample. This test is claimed to instantly detect medical conditions such as cancer and high cholesterol.
Investors also came because they were promised to reap big profits. Holmes became one of the richest women in the United States in 2014, according to Forbes.
Theranos raised funding from snapper investors such as Draper Fisher Jurvetson and Larry Ellison. Undeterred, they collected more than USD 700 million. Conglomerates, from Henry Kissinger to Rupert Murdoch, invested in the company.
However, it was later proven that Theranos startup technology was not qualified so Elizabeth was sentenced to prison for more than 11 years. He was found guilty of deceiving investors about the effectiveness of his company's blood test device.